I have a question about being independent. Actually more about fee based business. My basic understanding is you charge for example 1 % of the clients assets under management and you get that as an annual fee?
My understanding may be way off but that is the impression I get. If that is true say ive got 33 mill in assets then I make 330,000 per year? Im sure ive got that wrong that sounds too good to be true. How does fee based business really work?
Assuming that all 33 million is earning 1%, then $333,000 would go to your B/D as GDC. You would then get a cut of that based upon your grid if you had one. That would be your revenue. It would not be your income. You would still have to pay all of your business expenses.
Your income, even as an independent, is probably about 60-70% of your gross at 1%. It can fluctuate up or down from that based on the fee you charge, your expenses, and the average size of the account (LPL retains more for smaller accounts).